Software

Software for the business sector

What's happening in the business sector with respect to software?

The year 2002 saw the beginning of a new sinister business software trend whereby major software manufacturers such as Microsoft are specifically targeting businesses to pay more for their latest and greatest software. The higher prices being asked are not just at the moment of buying software for the first time, but also if businesses don't do the right thing by regularly upgrading/updating the software every 12 months or less.

According to Helen Han and John Fontana in their article Licensing: Users feel forced to pay up published in the 15 April 2002 edition of Computerworld, end-users (including businesses who rely on software as part of their IT strategy) are now feeling the pinch from major software manufacturers such as Microsoft to stick with their existing "flagship" software brands and to regularly upgrade the software, or else face higher software costs.

For example, the bullying tactics employed by Microsoft included a change in licensing agreements with end-users forced to pay up to 2 years in advance for the privilege of having software upgrades (assuming, of course, there are software upgrades available, which Microsoft cannot guarantee). Otherwise end-users who wait too long (approximately 12 months or more) before deciding to upgrade to the next software version will have to pay for full licenses.

The fancy name given to this new software licensing strategy is Software Assurance, at least in the eyes of Microsoft.

Barry McGrady, manager of global technical services for the mineral processing company Imerys, is not particularly happy with the new licensing arrangement. He said:

"[Software] vendors are herding users in the direction they want them to go instead of letting us go at our own pace. I don't like being herded.

It means I'll have to pay more and buy all new licenses down the road." (1)

Craig Horrocks, a partner of the New Zealand law firm Clendon Feeney based at Auckland and part of the operation arm of Infraserv, believes Microsoft's new licensing strategy is "a mistake". As he sees the situation at the moment:

"Locking a customer into a two-year guaranteed income stream is much better than being reliant on customers deciding that an upgrade is good value before they spend their money. Being paid and not having to deliver anything is even better.

What other supplier in the world, other than possibly government through taxation, can ask you to pay for something which is not defined and if nothing is delivered still claims you receive a benefit?

There are no service levels, there are no minimum deliverables, in fact Software Assurance promises nothing other than that the customer has the right to upgrade, if Microsoft releases any upgrade." (2)

The law firm has recently filed a complaint to the New Zealand Commerce Commission to investigate possible anti-competitive behaviours by the big US software company under the Fair Trading Act.

Why the software price hike and new licensing arrangements?

Of course, some of you might be wondering what possible and carefully thought out reason could there be for the latest action taken by the major software manufacturers?

Well, the official reason, or so we are told, is because the major software manufacturers are being financially strapped in this current economic downturn in the IT industry. In other words, people like Microsoft  considered the world's richest company  are finding it hard to survive.

In that case, why have they decided to specifically target the licensing arrangements and increase the software prices instead of improving the software products in the way customers and other businesses are looking for and/or keeping themselves more lean and trim in the salary department for instance? Unfortunately, none of the software giants were able to comment on this aspect.

Or could it be because the major software manufacturers have just caught on to the fact that more and more customers and business professionals are getting too smart and are now becoming aware of the extra choices by way of "alternative" and cheaper software to do the same or similar tasks as the major software products can do?

Or maybe the marketing experts at Microsoft has discovered the importance of forcing people to constantly change and update in order to keep the software companies profitable and keep the shareholders happy?

Or what about the fact that Microsoft has just recently introduced the new subscriptions Web-based application technology allowing end-users to rent software and use it while being online. In that way, the software manufacturers can unofficially obtain any marketing information they like from the user, possibly look for commercial advantage in the files people create with their online software, and to minimise what Microsoft considers to be a serious software piracy problem (3). However, for this technology to work, Microsoft does have to solve a few problems. In particular, people are expressing concern over the privacy and security issues associated with this new web-based software application technology from Microsoft.

So what's the solution? Apparently Microsoft has not only gone on a massive public education campaign to convince everyone that it is really okay to use Web-based applications, but has also priced the independent non-Web-based Microsoft software products and their corresponding upgrades in such a way as to give little choice for customers except to either consider the web-based application technology, or do what Microsoft says by regularly buying and upgrading the fully independent software every 12 months or less at an inflated price.

Surely this has to be a classic example of anti-competitive behaviour being displayed by the software giants (e.g. Microsoft) with extreme subtlety?

Are there software alternatives available?

Now that the major software manufacturers have suddenly seen the need to raise the price of their flagship software in 2002 to a level never seen before except for those working in the mainframe industry, businesses are now looking for equivalent and cost-effective software alternatives.

As at time of writing this section, most big businesses have little choice but to stick with the products they are using. Because big businesses tend to rely on those big "one-off" and highly specialised software products with no competing products to choose from, or whose software products are heavily entrenched in the fundamental operations of the businesses, there are practically no options available to them other than to carry on with what they are doing.

For smaller businesses, this should be less of a problem. In fact, the smaller the business, the less money available to spend on IT, and therefore the more businesses have to rely on low-cost, flexible and fortunately more readily-available software products to run the business operations. Hence with this lower cost in the software comes a much greater range of alternative software to choose from.

So what's on offer for the small business? Are there any software to compete with the likes of Microsoft Office?

Yes there is. Here is our recommended list of alternative software to consider for small businesses:

Blender 3D (Free)  an entirely open source and free 3D modelling and animation program suitable for virtually every platform. A steep learning curve initially, but plenty of video tutorials to get you started.

Serif Affinity Designer 1.2 or higher (Commercial, but under the US$70 mark and clearly the best alternative "built from the ground up using latest technology" software tool to really compete against Adobe Illustrator even right up to version CS 7, and it will read and save illustrator-format files too).

Serif Affinity Photo 1.2 or higher (Commercial, but under the US$70 mark and by far and away the best alternative "built from the ground up using latest technology" software tool to really compete against Adobe Photoshop even right up to version CS 7, and it will read and save Photoshop-format files too).

For a free open source image manipulation program, try The Gimp for Linux, OS X and Windows. It will do most of the things Adobe Photoshop can do. There is even a version of GIMP that looks remarkably like Adobe Photoshop for those users wanting a bit of familiarity in their software.

NOTE: If your computer has stereo input and output sockets, just get a cable from an electronics store with the correct stereo connectors at the end to help you reroute sound from the external speaker output socket to the microphone input socket and make sure feedback to the speaker from the microphone is turned off. Then you can use any sound enhancing utility to improve the sound and digitally re-record it again. The quality is just as good as the original.

Audacity 2.1.1 (by far and away the best freeware audio editor for the Mac and now quite stable to use. Comes with a range of remarkably professional audio editing and special effects features to make your sound files sound, well, great!)

OcenAudio 2.0.4 (a great alternative to Audacity 2.1.1 and even the user interface looks decent for a change considering it is meant to be freeware on a Mac. It does come with a good selection of audio editing and special effects features).

Nullsoft/AOL Winamp 2.7.9 (Described by the makers in 2015 as "It really whips the llama's ass!", this freeware for PC and Mac is great for enhancing digital sounds using the graphic equaliser console buttons, or convert to different sound file formats. Today, the tool has transformed itself to now handle the playing of any media files).

Oliver Dreer's MPEG Audio Player 1.7.4 (Freeware for Mac; use it to change the speed rate of the sound and re-record as above)

Alberto Ricci's SoundEffects 0.9.2 (Shareware/Freeware for Mac; use it to directly edit sound files with cut and paste capabilities as well as apply various free filters to the sound for those special sound effects etc)

Norman Franke's SoundApp 2.7.3 (Freeware for Mac; use it primarily for converting between a wide range of sound file formats).

Deneba Canvas 6.0 (Freeware for PC and Mac) or any illustration package that can read/write PDF files.

PDF-to-Word document conversion

ALTERNATIVES

FormSwift PDF-to-Word Converter (A free online service. Comes in handy for the people of FormSwift to create generic free legal and tax forms for downloading to the public, so only use if your PDF documents are not really sensitive. Still a great service, and an absolute pleasure to use).

The free and original open source Sun Microsystems OpenOffice 2.0 released in October 2005 has had some reasonable improvements made to it by Apache (the ones famous for making robust Apache servers to deliver web sites online) after taking over the management of the open source code. Unfoirtunately, Apache OpenOffice 4.1 is a little too buggy and limited in features for serious use by professional users (okay for basic users). NeoOffice 2014 or LibreOffice 5.0 is by far the most stable software tool based on the same open source code of the original OpenOffice. Of all of them, NeoOffice 2014/15 is the best in terms of having the most useful and well-designed features despite costing US$29. Otherwise, LibreOffice 5.0 remains the best of the freeware for something that is stable at the present time.

The free and original open source Sun Microsystems OpenOffice 2.0 released in October 2005 comes with a slideshow/presentation tool. Quite reasonable. You are better off going for the most stable versions  either NeoOffice 2014 or LibreOffice 5.0.

Lotus Freelance Graphics 97 (Freeware for PC) or higher (Commercial)

Aldus Persuasion 2.1 or higher (now defunct, but still considered good and very stable software if you can get your hands on a copy. Get PC version as Mac version on Mac OS 9 changes the interface).

The free and original open source Sun Microsystems OpenOffice 2.0 released in October 2005 comes with a good text editing tool. However, for greatest stability, try the text editing tool available in NeoOffice 2014 or LibreOffice 5.0.

The free and original open source Sun Microsystems OpenOffice 2.0 released in October 2005 provides a good spreadsheet tool. However, due to limited features and stability issues, we recommend NeoOffice 2014 or LibreOffice 5.0.

Lotus 1-2-3 version 9.5 (Freeware for PC) or higher (commercial)

602Pro PC Suite 2001 (Freeware for PC, but requires registration to stop it from pestering you to register).

Can I use the free software for my business?

Unless the software manufacturer states otherwise, there is absolutely no law against any business in using the software given away by software manufacturers.

If you intend to use any of the freeware versions of the abovementioned "commercial" software for your business, always check to see whether the software manufacturer will permit you to use it for commercial purposes. If there is nothing in the software or accompanying instructions to indicate that it cannot be used for commercial purposes, then go ahead and use it. There is no reason why you must pay hundreds or even thousands of dollars for brand new software if the older free software will do. Also if the free software is obtained from magazines, make sure you purchase enough magazines with its own software for the number of people who are likely to use it in the business (unless the serial number is identical). Or better still, let employees purchase their own software copy and encourage them to use it.

Or, if you really must stick to the major software manufacturer's "flagship" products at commercial prices, consider purchasing the classic commercial software versions of say Microsoft Office, Adobe Photoshop or other big-brand software. For example, Microsoft Office 97/98 is considered an absolute classic. It has practically all the features a business is ever likely to need. So why upgrade it to the very latest? Because Microsoft says it is better or cheaper to do so? Rubbish!

Furthermore, as of 2016, a number of new software manufacturers are now competing directly with the big players of Adobe, Apple and Microsoft with cheaper and equally powerful tools. A classic example has to be Affinity Photo, by Serif. This is a recent entrant in the photo editing world. Priced below $100, what you get is a powerful tool to compete with Adobe Photoshop. Actually, some professionals have decided to do away with Photoshop in favour of the newer Affinity Photo for its features, speed, stability and ease of use.

Before buying or upgrading software, ask yourself what exactly are you trying to achieve?

Unless you are the richest company in the world (i.e. Microsoft) or your business is in the business of selling IT, every other business manager should seriously ask him/herself what is the purpose of his/her business? Even if you are not a business professional, you should still be asking yourself, "What do I hope to achieve in life with the help of certain software tools I wish to use?"

You will need to ask this question carefully because you have to know why you are here. Are you here to constantly buy new software and upgrade it as many of the software manufacturers would like you to do? Or is your purpose to sell a product or service to (or helping) your customers? If you say it is to sell a product or service (or to help yourself and others), then you will realise it is not IT what drives the business, but rather it is the product or service and the customers who need the product or service which makes or breaks a business.

IT is just another tool for helping you to be more efficient and effective in performing the tasks within your business, and it should give you more time to think about the big picture of how to help people in a better way. IT is not the goal. People (the environment) and what you have to offer are the goals.

As Aram Dayeian, the IT manager at Starbucks Australia, argues:

"It's the business objective - and for us it's selling coffee to our customers - that drives the business, not IT." (4)

The emphasis on the business end of IT rather than of IT itself is again reinforced by Mike Ansell, IT manager for Wonderland Sydney:

"I think it is important to create projects that are driven from the business unit end. I don't put a project up as an IT project. The focus needs to be on the revenue or cost-control benefits of the project." (5)

And ultimately the focus for all this revenue raising and cost-cutting exercise with the help of IT should be for the benefit of the customer (both internally and externally of a business).

Major software manufacturers need to listen to customer concerns more carefully

The problem with major software manufacturers today is that many believe they can ask for whatever they want from customers because they know how good the software is and have realised how much of the software is entrenched in the marketplace, in particular the business sector.

In other words, there is a belief among major software manufacturers like Microsoft that because of their market dominance in the software industry, the manufacturers don't expect their business customers, for example, to upset this balance for them. The manufacturers believe they have the right to maintain their recent levels of high profitability by merely providing simple interface changes to their software products and then watching their customers spend the money to move to a higher software version of their existing software product.

But the marketplace has changed and a new reality is taking hold for most people. This time customers in the business sector are getting smarter and are questioning the value of upgrading and buying new software, especially if there are no substantial improvements or benefits from previous versions. And improvements don't necessarily mean more "bells and whistles" like those animated characters dancing about on the screen everytime you want to use the Help feature!

Unfortunately, the major software manufacturers cannot see this. To them, any improvement is considered a major improvement and something that everyone must have no matter what. And while the manufacturers continue to think this way, they will quickly become the big dinosaurs of the software industry. Even more so if the software manufacturer continues to maintain staff numbers of 500 or more which would naturally create a massive financial burden to the manufacturer and thus partly explain the price hike in the latest software products.

If major software manufacturers like Microsoft want to survive in the current IT industry, it cannot simply raise the price of the products and force people to do certain things to help maintain profits. What about the software products themselves? They certainly need a major overhaul in areas like better security and in simplifying the number of features we are being overloaded with.

To make sure all this software being sold by the major software manufacturers is truly relevant and useful in the marketplace, ask what businesses and customers are really trying to achieve with the software? Certainly it should not be to constantly spend more money on new software simply because it has more "bells and whistles" and no real substance to make it look like a worthy acquisition.

So why not introduce some truly innovative, useful and powerful features into the software products such as effective speech-to-text technology, or even going the other way by introducing a stripped down version of the "flagship" software at a very low price? Then give customers a special deal to purchase the full product. At least that might put a few shareware programmers out-of-business if these major manufacturers are so keen to dominate the software market.

Or more importantly, why not spend more time and effort improving the security of the software? Business professionals are constantly on the look out for software improvements in this area. In a world where customers and businesses are trying to conduct safe and secure financial transactions electronically, they need to know whether the software they are using will have top-notch security more so than any fancy new interface the software manufacturer can come up with.

So why not produce quality "high security" software in this field? Or are major software manufacturers deliberately making the security aspects of their software so poor because they are more interested in getting sufficient marketing information from their customers or for some other reason?

Should I rent or buy software for my business?

Now that the price of certain software has made a jump in 2002, buying (and now upgrading to) the very latest "feature-rich" and attractive-looking software is starting to become an expensive exercise for most small- to medium-sized businesses, especially if the number of users who must use the software suddenly grows. That is why Microsoft Corporation has now introduced a scheme for renting the software a business needs on a monthly or yearly basis with the help of the Internet. In other words, it is now possible to use Microsoft Office products over the Internet for a certain time-limited licensing fee, known as Web-based applications.

Renting software will certainly be cheaper than buying the software outright if you intend to upgrade the software on a regular basis and there will be lots of people using the software. And, in fact, as an incentive with certain software companies like Microsoft, the price to purchase even a basic software upgrade to a full, independent "non-Web-based" software version is now skyrocketing so that hopefully enough customers will move to the Web-based applications technology.

Our recommendation is that if the software is to be used by only a few people on a regular basis and there is little need to update the software because you have all the features you need, then purchase the software outright. It may cost more in the short-term, but the long-term costs are far better. Alternatively, let employees purchase their own copy of the software (or choose alternatives) and let them use their own equipment to do the work (possibly from home).

NOTE II: If employees should choose to bring their own software to work, make sure they are using legitimate software or at least have them sign an Employee Compliance Statement confirming that they will take full responsibility if they are not using genuine software at work.

Han & Fontana 2002, p.14.

Malcolm & Rossi 2002, pp 1 & 3.

According to a report by antipiracy organisation the Business Software Alliance (BSA) in 2001, US$3 billion (A$6 billion) was said to have been lost in Western Europe by European software pirates in 2000. Well, compared to the $100 billion plus the software industry is worth, this is a drop in the ocean. But still, US$3 billion is a lot of money in anyone's language.

In Australia, the software piracy problem is thought to be costing the software industry approximately A$300 million annually. Does that mean stopping software piracy is impossible if the figure is constant every year?

Seriously, according to many software manufacturers, the increasing cost of software is supposed to be directly attributable to this software piracy problem. As Brad Smith, a lawyer for Microsoft, said:

"If there wasn't piracy there would be more software companies in Russia and Eastern Europe.

'As the legal market grows, there is more investment in new products and enhanced competition. A healthy market leads to more attractive prices for consumers." (PC Utilities: Piracy on the high PCs. July 2002, p.8.)

In other words, Smith is saying that no piracy would equate to the lowest price for the software. Is that true?

Well, lets look at the reverse of this logic. By increasing the price for software, it should deter software piracy. Is that what's happening today? No. BSA are claiming the software piracy is getting worse in Europe (and by implications other parts of the world) despite the high price for Microsoft Office, Adobe Photoshop and other applications over the last 4 years.

In fact, the latest figures at hand from BSA is that the percentage of pirated software has increased from 34 per cent in 2000 to 37 per cent in 2001.

The lesson is clear. Increasing the price of software makes the software privacy problem worse especially in areas where people cannot afford the software (e.g. in Eastern Europe, Russia, China and elsewhere).

And what exactly do the software manufacturers mean by the lowest price if no software piracy existed? US$500? US$800? Or maybe US$1000 for a product like Microsoft Office?

It may be true that many software manufacturers haven't got a clue when it comes to defining the lowest price because they are relying on what their marketing gurus say, which is that a software company in a developed nation are likely to find customers in the high income bracket who may use the software and therefore the manufacturers can charge any price they like especially if the products are popular or well-entrenched in the business community or consumer market.

Even if there is no software piracy, so long as there is the top 20 per cent of individuals in society who can pay up to $1000 or more for software, then who cares for the rest of society.

So what can we do to solve this problem?

Do what the people in India are doing (e.g. with books etc). Don't deny people in less fortunate circumstances to freely (or at a very low cost) acquire and/or learn from the products being sold in the marketplace. Just let the ones who can afford it, pay for the privilege (perhaps by having their very own copy). Otherwise, keep the prices down for the benefit of everyone.

Or we start changing the way the current Westernised system rewards people for their efforts through money.